Correlation Between Procter Gamble and Chewy

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Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Chewy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Procter Gamble and Chewy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Chewy Inc, you can compare the effects of market volatilities on Procter Gamble and Chewy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Procter Gamble with a short position of Chewy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Chewy.

Diversification Opportunities for Procter Gamble and Chewy

0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Procter and Chewy is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Chewy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chewy Inc and Procter Gamble is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Procter Gamble are associated (or correlated) with Chewy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chewy Inc has no effect on the direction of Procter Gamble i.e., Procter Gamble and Chewy go up and down completely randomly.

Pair Corralation between Procter Gamble and Chewy

Allowing for the 90-day total investment horizon Procter Gamble is expected to under-perform the Chewy. But the stock apears to be less risky and, when comparing its historical volatility, Procter Gamble is 3.36 times less risky than Chewy. The stock trades about -0.17 of its potential returns per unit of risk. The Chewy Inc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,303  in Chewy Inc on July 7, 2022 and sell it today you would earn a total of  364.00  from holding Chewy Inc or generate 11.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Procter Gamble  vs.  Chewy Inc

 Performance (%) 
       Timeline  
Procter Gamble 
Procter Performance
0 of 100
Over the last 90 days Procter Gamble has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Procter Price Channel

Chewy Inc 
Chewy Performance
0 of 100
Over the last 90 days Chewy Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Chewy Price Channel

Procter Gamble and Chewy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Procter Gamble and Chewy

The main advantage of trading using opposite Procter Gamble and Chewy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Chewy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Chewy will offset losses from the drop in Chewy's long position.
Procter Gamble vs. Amazon Inc
The idea behind Procter Gamble and Chewy Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Chewy vs. Amazon Inc
Check out your portfolio center. Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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